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I was reading this article, and I am puzzled by this paragraph:

Airbus reported a 34% fall in net income to €895 million ($1.1 billion). The company also suffered about €2 billion in cash outflow in the first six months of 2017.

So how can can the company have an income of €895 if it has lost €2 billion in cash outflows?

If it has a €2 billion cash outflow, doesn't that mean that it's net income is a loss of €2 billion?

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  • $\begingroup$ Imagine someone makes \$100,000 this year but buys a \$1,000,000 house. They have positive income but negative cash flow. $\endgroup$
    – Matthew Gunn
    Commented Jul 28, 2017 at 19:58

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Without looking at the Airbus article, cash flow and income do not have to move together.

Assume AirBus is a very simple company, all they did was sell one plane which cost them 100 million to build and they sold it for 120 million.

With no other transactions, AirBus would have a Net Income of 20 million but its cash flow can be negative 100 because it has paid the full cost of the parts and labor but has yet to collect from the buyer. Additionally it could have just invested 100 million in a plant and none of that is expensed yet (rather capitalized on the balance sheet) so there would be another 100 million cash outflow for a negative total cash outflow of 200 million despite being profitable.

PM if you need help, I do this for a living.

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